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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: D VanSwol who wrote (4797)	5/28/1998 12:38:00 PM
From: Bruce A. Bowman	Respond to of 18928

Hi Dennis- I understand... it's hard to accept pure money management when you've spent years disciplining yourself as a trader based on fundamental or technical conditions. AIM, of course, doesn't care. It's only purpose in life is to generate LIFO profits and the underlying arithmetic + faith in the market turn LIFO profits into LT profits. In case the general market has you a little spooked, here's an analysis from a guy that's bullish nearterm. This comes from an (almost) daily e-Mailing from Don Fisher called DGL (for Dynamic Gann Line), or Ganntrader. DGL is a technical analysis method which is very subjective in its application, making it unappealing to most who use TA and pure hocus-pocus to the rest of the investing world, especially when applied to equities. However, in the hands of an experienced user and applied to futures, it can be uncanny. This AM Don quoted a DGL/Ganntrader subscriber, Jayanth Rajan (a guy who called this correction in Don's Ganntrader mailing), who sees a possibility of a strong rally here: Wed morning I received an email from long-time member Jayanth Rajan -- a follow-up on his email from last week. Congrats to him, since his forecast on the S&P and Bonds made then (which I shared in the May 17 update) has been proven right by the action this week. Here's what he had to say this morning: "This is the sell-off I had predicted in my last message. I expected a drop slightly below 1094.53 in cash S&P 500 and that has happened. It is now critical that we hold above the 1076 level otherwise we are likely to see a deeper correction. My analysis suggests that the odds of that level holding are very high and I feel that there is a good margin of safety in entering the market at this level. "I must also point out that several breadth indicators that I follow are at very oversold levels. The internals of the market have been really shot since late March. The McClellan Oscillator which is a good short to intermediate term indicator hit very oversold levels when SPX hit 1076 (the last big selloff). The indicator has risen since then while the McClellan Summation Index which is a good long-term indicator has continued to decline to oversold levels. The Summation Index lags the Oscillator. I like to see the Summation Index reach oversold levels after the Oscillator has hit oversold levels. "The bottom-line is that I am expecting a huge rally and I am putting my money where my mouth is. Sentiment which I track is very bearish. Also the CRB index broke down late last week and the T-bonds started rallying on Tuesday. I expect that we might see a slight backup in interest rates here since the T-bonds are overbought but any pullback should be seen as a buying opportunity since all the bearish[ness] in Southeast Asia can only be good for the U.S. bonds, U.S. Dollar, and U.S. stocks. Flight to quality is another name for this behavior." Of course what JR is talking about re: bonds is bond futures which are based on bond prices, not the resulting yield which changes inversely with price. And the SPX is the underlying index for trading S&P 500 futures. So keep AIMing... at least someone out there thinks a turn is coming. :-) Bruce